The Clothes Make The Retailer

May 28, 2004

By George Anderson

While this week’s annual shareholders’ meeting was short on specifics for how Kmart planned to stop its skidding same-store sales, one thing has become increasingly clear, the retailer believes that clothes are going to go a long way in making or breaking its business.

A few months back, Kmart opened a separate design office in New York with high-profile recruits from the Gap, Donna Karan and Pacific Sunwear on its team.

Now, as the Detroit News reports, the retailer is redesigning two of its existing exclusive brand lines, Jaclyn Smith and Sesame Street, while introducing a new line of baby clothing and career wear targeted to women over 40.

According to Kmart’s chief marketing officer, Paul Guyardo, the Jaclyn Smith line will be “reinvented” while the Sesame Street clothing will be more “character-driven”.

Kmart’s new baby clothing line, Small Wonders, is said to be similar to the designs found at Baby Gap.

Attention, Kmart’s new apparel line, includes jackets and slacks for women 40-plus in professional settings. It will be available in stores this fall.

Kmart’s Guyardo said the chain intends to keep prices in line with what its shoppers can pay. This will be necessary if Kmart is going to achieve Mr. Guyardo’s goals for the category.

“My number one goal to drive profitable sales and apparel is really a big part of what defines a retailer. When the customer has to make a decision about where to shop, we … want them to shop at Kmart because they can only get these brands here,” he said.

Moderator’s Comment: What are your thoughts on Kmart’s apparel strategy for making the chain a shopping destination?

This all looks good on paper, but the real test will be on the number of consumers coming into the stores and leaving with bags filled with Kmart’s exclusive
brand clothing.

The chain has a history of saying the right thing and then not executing. Let’s hope this time it’s different. It might just be considering the deal announced
last week with the WB television network to have stars of five of its shows wear clothes from Kmart’s Thalia, Route 66, Joe Boxer, Athletech and Gear 7 lines as part of an extensive
marketing campaign targeted to younger consumers.

George Anderson – Moderator

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